A senior Bahraini government official revealed the country’s budget deficit has ballooned up to five-times in the last 10 years. He added that the figure stood at 1.8% in 2002 and is expected to reach around 9.7% by the end of this year.
Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa warned MPs not to jeopardise the country’s economic recovery programmes by pushing unrealistic spending plans and undermining its economic strength.
Shaikh Ahmed assured the government was is determined to take risks despite the international financial crisis in order to meet demands for new infrastructure projects. “We have to take into consideration that for us not to see any deficit, the oil barrel price should be at an average $124,” he said.
“We don’t want to go on spending without control and see the same fate some European countries are facing at the moment with many out of jobs or without homes. Bahrain’s economy will be in jeopardy if our spending doesn’t match our resources and we have to be realistic in spending and stop taking decisions based on emotions because it is taking us on a wrong path,” he underlined.
The minister was responding to a question by MP Mohammad Buqais on freezing pensions.
“The demands to increase pension payouts is genuine and MPs can always negotiate with us when we discuss the new budget for next year and 2014 to shift funds from housing to support the Pension Fund Authority (PFC),” he said.
“The PFC’s funds are contributions made by workers and payouts given as pensions match their input with some government support, but we can’t give more privileges from someone’s savings to make another happy. When the time comes for future retirees, what will the PFC give them, if the funds are drained?”
Shaikh Ahmed insisted that nearly half of country’s pensioners got a 25% hike last year and warned MPs to take Bahrain’s financial reality into stock before flexing their muscles.
However, another MP, Abdulhaleem Murad, reacted angrily to the minister’s statement and demanded to delete the statement from the proceedings.
“The government has just given BD400 million ($1.06 billion) to Gulf Air and now it is planning to give it around BD700m, which is more than a billion that could have been spent to increase pensions and make many families happy,” said MP Mohammed Buqais in response to the minister’s speech.